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Weighing Strength + Weakness of Traditional Mom-Pop Stores

February 22, 2009


This is our findings on the Strength and Weakness of Running a Traditional Kirana or similar Mom-Pop store.

Strengths of Running a Traditional Store over a Retail Chain:

  • Capital requirement is low due to smaller scale of operations, resulting
    in low rents and overheads
  • Traditional stores are incumbents in prime residential areas and may already own the premises in high-cost locations
  • In some cases, they cater to locations which may be unviable for entry of larger/ organised retailers
  • Storekeepers provide credit for monthly purchases especially for users who wish to avoid credit cards
  • They may have good existing relations with the people residing around the area of their store. Long operating hours and home delivery/ phone/ quick delivery even on small ticket items.

Disadvantages of being into Traditional Retailing:

  • Due to small scale of operations, they lack bargaining power. On the other hand, organised retailers are able to provide quality products at a discount, due to scale and tighter supply chain. This is the biggest threat to traditional stores.
  • Traditional store keepers have developed a poor reputation over the years as they are perceived to squeeze margins on three counts, which are viewed unfavorably [They don’t acknowledge this openly, but its a fact] – 1. Adulteration / hygiene / lack of quality assurance especially for goods sold loose 2. Overcharging with Incorrect Weights and 3. Tax Evasion
  • Lack of ambience. Most traditional stores do not or are unable to invest in a comfortable environment where shoppers can look at all choices before making a selection
  • Traditional stores store a smaller variety of goods. They typically store ~300 items versus ~1,200 for supermarkets and 10,000+ SKUs in hypermarkets [Shopping under one roof]

Adapt or perish – mom-n-pop stores need to get their act together 🙂

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